Tuesday, October 11, 2016

There's a Reason You Don't Hear Specifics About Gigabit Take Rates

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Back in the days when cable TV operators first were rolling out consumer Internet access at speeds of 100 Mbps, it was virtually impossible to get subscriber numbers from any of the providers, largely because http://littlebitjohnny.blogspot.com /2010/06/how-much-speed-is-enough.html" style="text-decoration: none;">take rates were low.

In the United Kingdom, then planning on upgrading consumer Internet access speeds to “superfast” 30 Mbps, officials complained about http://littlebitjohnny.blogspot.com /2011/11/ofcom-warns-of-low-interest-in-super.html" style="text-decoration: none;">low demand. In fact, demand for 40 Mbps was http://littlebitjohnny.blogspot.com /2011/03/bt-uk-frustrated-by-lack-of-fttc-demand.html" style="text-decoration: none;">less than expected.

In 2010, for example, about 40 percent of U.S. consumers were buying Internet access at about http://littlebitjohnny.blogspot.com /2013/02/100-mbps-access-will-be-common-by-2020.html" style="text-decoration: none;">6 Mbps.   

It is possible the same remains true for gigabit access services. No Internet service provider of any size actually releases the number of accounts, though most are happy to cite cities and neighborhoods served, or homes able to buy the service (passings).

Those are significant indicators, but still do not address the question of how many customers actually buy.  

Early in 2016, Paul de Sa, Bernstein Research equity analyst, predicted Google Fiber would reach roughly 2.4 million homes by the end of 2017.
MoffettNathanson at roughly the same time predicted that AT&T would reach 5 million "customer locations" by the end of 2017. CenturyLink estimated in late 2015 that it would have 700,000 households passed by gigabit access networks in operation by the end of 2015.

Comcast, for its part, plans to upgrade 100 percent of its consumer base to gigabit access over the next few years.

The issue will still remain the take rates.

CenturyLink executives, for example, have said that http://littlebitjohnny.blogspot.com /2015/03/sometimes-gigabit-access-primarily.html" style="text-decoration: none;">gigabit marketing primarily drives new sales of accounts buying 20 Mbps or 40 Mbps service.

It is clear that price matters. When Internet service providers http://littlebitjohnny.blogspot.com /2014/11/nextlight-municipal-gigabit-network.html" style="text-decoration: none;">drop the price enough to create a really-compelling value-price offer, consumers respond.

If ISPs do not readily announce the number of gigabit accounts they have in service, it likely is because relatively few consumers are buying those services.

Municipal gigabit access provider NextLIght expects a take rate of about 37 percent after five years, selling gigabit service at a charter rate of $50 a month ($100 a month is the standard rate).

Based on experience from other markets, NextLight will have the best chance to reach those adoption goals if it sells at the $50 price, not the the $100 price.


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